ESOP FORFEITURES

[Guest thesop]

This question relates to ESOP fofeitures and when are they allocated to remaining participants, basically a timing question.

We have an ESOP whereby its distribution policy changed from paying out 100% of vested amount upon termination to paying out to 20% of the vested amount over a 5 year period.

With the old policy forfeitures were allocated either upon distribution or after 5 years if the terminated participant had not requested a distribuion.

Now the plan has changed paying out only 20% of the vested amount over a 5 year period. When do forfeitures get allocated out....is it 20% over a 5 year period or upon the entire vested amount being paid out.

The plan document indicates that for the 401(k) forfeitures will be paid out upon the entire vested balance being paid out or after a 5 year period if the terminated participant has not requested a distribuiton.

of which the 401(k) is paid out at 100% at upon request after the plan is valuated for the end of the end of the plan year.

continuing....when the plan document gets to the forfeiture section of the ESOP part of the it states how forfeitures are allocated and then states to refer to the above section.

Please note this plan is an ESOP with a 401(K).

What would be the determining factor of when to allocate forfeitures? thanks.

[stephen]

The plan document indicates that for the 401(k) forfeitures will be paid out upon the entire vested balance being paid out or after a 5 year period if the terminated participant has not requested a distribuiton.

of which the 401(k) is paid out at 100% at upon request after the plan is valuated for the end of the end of the plan year.

It seems to me that you answer your questions with this section of the plan document. As forfeitures occur when the entire vested balance has been paid out you will now wait until the five years have passed to forfeit as this conincides with the vested balance being paid out.